Factors that affect retirement income
When it comes to planning for your future, ensuring that you have a good retirement income weighs heavily on the minds of most people. Although the retirement age continues to increase, as many more people are starting to live to 100 and older, your retirement income may now have to cover you for over 30 years.
With this in mind, many people like to consider a range of factors before choosing how to invest and spend their retirement income. Some of these factors can have a dramatic impact on your final sum and ensuring that you have enough money to support both yourself and your family over the long term.
The following are several key factors which could influence your retirement income:
The length of your retirement and inflation will all contribute towards your income. The amount that you spend on daily life including any rent, tax, bills, presents, or anything else that you have to purchase will contribute to reducing the value of your retirement income. In addition, inflation means that your money may continue to be worth less as society becomes increasingly expensive, so it is worth considering what your money today may be worth in 30,40 or even 50 years.
Tax plays a big part in retirement income and depending on what plan you choose to take out, you could find yourself with a great deal of tax offsets, or a deal of tax to pay. It’s worth considering how much tax you will have to pay when it comes to picking an annuity as this can have a great impact on your end of day retirement income and could potentially put significant amounts back into your pocket.
Healthcare is not cheap, and although the UK Government offers a great range of National Health options, there are many people that may require more intensive care over a longer period of time. As we continue to get older our healthcare deteriorates and we frequently find that we are spending more money on medications, trips to the doctor and even the dentist, than we used to – this can put an additional financial strain on our income. It’s worth considering your long term healthcare options when it comes to thinking about retirement income.
Your investments become increasingly crucial when you retire as aside from any pension that you have, they become your main source of income. Unfortunately, not all investments are stable and any high risk that you have could easily go down or up depending on the nature of the financial market. It’s worth looking at how stable your investments are and how much you intend to be able to draw from them in upcoming years.
When it comes to thinking about retirement income there are a whole host of factors to take into consideration, some of the above are just scratching the surface and are well worth thinking about before you choose a pension package.